11.10.2023
Austrian Taxfix equivalent Taxefy finds itself in uncertainty over technical details
Founded in 2021, Taxefy set out to fill the void of the private tax market in Austria. The void was left there by German Taxfix which went to other big markets in Europe - alongside to their first market in Germany.
Similar to the German problem that Taxfix is solving - Taxefyoffers a modern (mobile) app to do the average worker’s private tax declaration. Making its users avoid the unintuitive web interface that the local tax authorities offer: ELSTER in Germany, FinanzOnline in Austria.
With Taxfix already testing their offerings since 2016 - with funding rounds having collected over 300.000.000 € - it did not seem to be a question of market fit for Taxefy to try out the same idea in Austria.
Starting with a business model that offers their services for free, Taxefy charges only 10% if the tax assessment actually ends up being a refund. And they started doing great right from the start: April 2022 - 100.000 € in refunds; between March 2022 until December 2022 - 2.000.000 € in refunds.
The first signs
Only in May 2023, there started to be the first signs of some problems that are still ongoing: the Austrian Chamber of Tax Advisors and Auditors (KSW) put out in writing a warning for all their members not to work together with Taxefy. And not only that, the Austrian Ministry of Finance (BMF) also saw some problems. To comprehend the sudden action, we need to look at how Taxefy actually works.
For tax advisors, Taxefy offers an easy way out of the most simple forms of the private tax declarations by giving them the possibility to have their clients use Taxefy - utilizing the FinanzOnline access from the tax advisors with a sub account to make the actual submission to the tax authorities. The KSW sees a breach of the Occupational Law of the tax advisors in that. The problem for Taxefy is obvious: without tax advisors, no submissions of tax declarations.
Next to the KSW, the BMF sees a problem in the app being simply too basic by not asking enough detailed tax questions for the declarations, so that the average worker would unknowingly give false information and thereby make the tax declaration incorrect. Furthermore, the BMF shares the concerns that the KSW has. The Power of Attorney to which the tax advisors refer seems to be difficult to actually verify and leave room for interpretation. Therefore, the BMFrevoked the access for submissions from Taxefy.
All of the mentioned parties are in ongoing exchange to solve the situation but it is an unclear situation for some time already. 50.000 declarations were still open to being processed in June of this year. It might be even more now.
To make peace with the BMF, Taxefy worked on an adjusted version of their app throughout the summer - with more detailed questions and other adjustments. Next to the recently released new version of the app, Taxefy also now offers the possibility to book the help of an actual tax advisor. This should also heal the relationship with the KSW.
Last words
Overall, it is another situation where a fast-growing startup is running into red tape. Since the tax sector is a sensitive one, involving lots of personal data, a high level of trust for tax advisors and the fear as an average human to do something wrong it is hard to judge any of the parties involved. Understandably, they all have their own agenda. In that sense, it seems healthy to see everyone trying to find a solution.
For the taxpayer, though, it might be good to have a solution sooner rather than later, since having an app for that apparently makes taxes fun again. At least if you expect a refund. That is also where the BMF misses out :-)
Sources
Founded in 2021, Taxefy set out to fill the void of the private tax market in Austria. The void was left there by German Taxfix which went to other big markets in Europe - alongside to their first market in Germany.
Similar to the German problem that Taxfix is solving - Taxefyoffers a modern (mobile) app to do the average worker’s private tax declaration. Making its users avoid the unintuitive web interface that the local tax authorities offer: ELSTER in Germany, FinanzOnline in Austria.
With Taxfix already testing their offerings since 2016 - with funding rounds having collected over 300.000.000 € - it did not seem to be a question of market fit for Taxefy to try out the same idea in Austria.
Starting with a business model that offers their services for free, Taxefy charges only 10% if the tax assessment actually ends up being a refund. And they started doing great right from the start: April 2022 - 100.000 € in refunds; between March 2022 until December 2022 - 2.000.000 € in refunds.
The first signs
Only in May 2023, there started to be the first signs of some problems that are still ongoing: the Austrian Chamber of Tax Advisors and Auditors (KSW) put out in writing a warning for all their members not to work together with Taxefy. And not only that, the Austrian Ministry of Finance (BMF) also saw some problems. To comprehend the sudden action, we need to look at how Taxefy actually works.
For tax advisors, Taxefy offers an easy way out of the most simple forms of the private tax declarations by giving them the possibility to have their clients use Taxefy - utilizing the FinanzOnline access from the tax advisors with a sub account to make the actual submission to the tax authorities. The KSW sees a breach of the Occupational Law of the tax advisors in that. The problem for Taxefy is obvious: without tax advisors, no submissions of tax declarations.
Next to the KSW, the BMF sees a problem in the app being simply too basic by not asking enough detailed tax questions for the declarations, so that the average worker would unknowingly give false information and thereby make the tax declaration incorrect. Furthermore, the BMF shares the concerns that the KSW has. The Power of Attorney to which the tax advisors refer seems to be difficult to actually verify and leave room for interpretation. Therefore, the BMFrevoked the access for submissions from Taxefy.
All of the mentioned parties are in ongoing exchange to solve the situation but it is an unclear situation for some time already. 50.000 declarations were still open to being processed in June of this year. It might be even more now.
To make peace with the BMF, Taxefy worked on an adjusted version of their app throughout the summer - with more detailed questions and other adjustments. Next to the recently released new version of the app, Taxefy also now offers the possibility to book the help of an actual tax advisor. This should also heal the relationship with the KSW.
Last words
Overall, it is another situation where a fast-growing startup is running into red tape. Since the tax sector is a sensitive one, involving lots of personal data, a high level of trust for tax advisors and the fear as an average human to do something wrong it is hard to judge any of the parties involved. Understandably, they all have their own agenda. In that sense, it seems healthy to see everyone trying to find a solution.
For the taxpayer, though, it might be good to have a solution sooner rather than later, since having an app for that apparently makes taxes fun again. At least if you expect a refund. That is also where the BMF misses out :-)